Annual Report and Accounts 2017/18

Summary for the year ended 31 March 2018

Welcome from the Chair and Chief Executive

It is incredibly exciting to hear feedback that we are making a big difference to people's financial lives.

Welcome to the online summary of our work during 2017/18, based on the priorities in our Business Plan. You can also download or view the full version of our Annual Report and Accounts, as well as additional reports from some of our key functions.

Read the video transcript. 

Message from the Chair

FCA Chair Charles Randell

Charles Randell

Chair FCA

We must act swiftly and decisively to tackle harm to consumers, particularly the most vulnerable.

Financial services affect the lives of everyone. And, as this Annual Report shows, keeping pace with the depth and breadth of developments in financial services, can be a challenging balancing act. We must act swiftly and decisively to tackle harm to consumers, particularly the most vulnerable. In the process, we have to make some difficult choices, learn from what works and what doesn’t – and be open about both.

Some of our priorities are beyond our immediate control. As our Business Plan for the next year explains, we will continue to devote a considerable part of our resources to Brexit.

At the same time, our remit continues to grow. This year, for example, we will take over the regulation of claims management companies. And, as this Report demonstrates, modern technology requires regulation that both keeps pace with current developments and anticipates their evolution.

Technology is key to delivering financial advice, products and services to meet society’s changing needs. It can slash costs, join up information and services and offers access to financial services to new groups of consumers. Innovation so far has barely touched the surface of what is, and will be, possible in the industry. But it remains a double-edged sword. It allows more people than ever before to access essential financial services, but may also expose them to risk, including the risk of cyber attacks and poor data control.

The FCA has been a consistent champion of FinTech and RegTech. Our advocacy and experience has encouraged regulators in other jurisdictions to follow suit. I hope and expect that the number of these joint programmes, both formal and informal, will grow. Not least because financial innovation on a global scale requires consistent standards of global regulation.    

As financial services have become globalised, so has financial crime. Whatever shape Brexit eventually takes, maintaining and deepening our partnerships with international regulators and law enforcement agencies will remain vital. The UK is, and must remain, an inhospitable place for financial crime. Both because of the inherent damage this type of crime causes and to ensure the UK remains a global centre for attracting and transacting legitimate business. Financial crime cannot have a home here.

I look forward to meeting and working with firms and consumer groups over the coming years. Both will benefit from the FCA’s move to our new Stratford office, which provides the technical infrastructure we need to regulate effectively. But moving to Stratford is more than simply moving buildings. We will be joining an existing community which is very different to that of Canary Wharf and we will be much closer to the consumers our work protects. We will work to ensure that we are a genuine part of that community, and support the people who live there.

Our move to Stratford is also a great opportunity to challenge ourselves to work differently: to be more collaborative across the whole of the FCA and to streamline our processes and be faster to deliver fair outcomes. As Chair I will ensure that the FCA Board supports Andrew Bailey and his senior leadership team in doing this, and that the FCA challenges itself to build on its considerable achievements to be the best it can be.

I am honoured and delighted to have been appointed Chair of the FCA at a time in its history which is both challenging and full of possibilities. I would like to pay tribute to the work of my predecessor, John Griffith-Jones. I look forward to building on his legacy in the years ahead.

Our work this year

Andrew Bailey FCA Chief Executive

Andrew Bailey

Chief Executive FCA

There are 3 key areas that particularly define our work this year: EU withdrawal, regulatory change, and treating customers fairly.

While this Annual Report illustrates the wide range of our activities, there are 3 key areas that particularly define our work this year.

EU withdrawal

The first is our ongoing work to prepare for the UK’s withdrawal from the EU, which cuts across all of our functions. The resource we have devoted to this work is, and will continue to be, considerable. As well as providing ongoing technical assistance to the Government, we have worked with firms to understand their future operation plans and their impact, worked on the design of the proposed temporary permissions regime for EEA firms currently operating in the UK, and continued our close cooperation with the European Supervisory Authorities.

The European Council’s agreement to the terms of a transitional arrangement earlier this year is very welcome. We support its implementation as part of the wider withdrawal agreement. It is important that markets and firms – and indeed regulators – have certainty. Our aim is to continue to work closely with EU regulators to deliver our joint objectives in the months and years ahead.

In the meantime, the UK Government has committed to legislate for a temporary permission regime. This gives EEA firms an important backstop to ensure they can operate as seamlessly the day after we leave the EU as they did before. It also provides important reassurance for consumers that the services they use from firms that choose to use the regime will continue uninterrupted. But it cannot currently provide the same assurance for customers in the EEA who use the services of UK firms, and we will continue to work with the EU to achieve this.

Regulatory change

While planning for a future outside the EU, UK firms and their regulators must still continue to implement and embed all EU legislation affecting financial firms and markets. This year we have applied legislation which will have profound implications for firms’ transparency, the way they treat consumers and, in some cases, even their business models.

MiFID II, which applied from 3 January 2018, presented firms with a challenging deadline, which the vast majority rose to. It addresses key drivers of harm from lack of transparency to operational resilience, and we will support firms to ensure it is fully embedded across the industry over the next year. The second Payment Services Directive, also implemented in January, has the potential to revolutionise competition for consumers through open banking, as long as firms can assure consumers their data remains secure.

This year has also seen us implement or extend important domestic legislation and rule changes that will raise standards of conduct, transparency and security in UK markets. In May 2017, we extended the Senior Managers and Certification Regime (SM&CR) to non-executive directors. In advance of the Treasury’s announcement about when the SM&CR will be extended to all the firms we regulate, we consulted on new rules that will drive up standards of individual conduct at all levels in financial services. 

Treating consumers fairly

Our work this year has sent a clear message to firms that, if they do not treat customers fairly, we will take action.

We now require credit card firms to help customers in persistent debt reduce their outstanding balances. Our new rules have reduced the costs and charges of workplace pension schemes to 1% or less. And we have also made new rules to better align the pay and rewards of staff in consumer credit firms with consumer outcomes. However, there is still a significant and ongoing amount of work needed to ensure consumers can be consistently confident in the financial products and services they rely on.

I would like to welcome Charles Randell as our new Chair, thank all my FCA colleagues who work so hard to deliver our increasing workload and the FCA Board for their expertise and challenge. Next year is certainly going to be an interesting one.

Cross-sector priorities

Firms’ culture and governance

Part of our role involves encouraging firms to actively focus on improving their cultures.

Financial crime and anti-money laundering

Our aim is to make the UK financial markets hostile to criminals.

Promoting competition and innovation

We promote competition and innovation in a wide range of ways.

Technological change and resilience

We promote innovation to help ensure new technologies are safely adopted.

Treatment of existing customers

We want to ensure that all firms treat their longstanding customers fairly.

Consumer vulnerability and access to services

We prioritise consumers who are unable to shop around over those who can.

Read more on Cross-sector priorities

EU withdrawal

Our work in this space covers 4 main areas: advising Government on technical matters, working with regulated firms, designing a temporary permissions regime and cooperating with international bodies and other regulators. We expect this work to increase in 2018/19.

EU withdrawal society

Our approach to Brexit

We have dedicated significant resource to coordinating and managing work on EU withdrawal across the organisation.

Read more about EU withdrawal

Sector priorities

Wholesale financial markets

These markets are vital to the UK’s prosperity and economic growth, so need to be effective.

Investment management

This sector is a key contributor to the UK economy, so it is important that we encourage competition.

Pensions and retirement income

Saving for retirement has a fundamental impact on financial wellbeing in later life.

Retail banking

This is central to the lives of virtually every consumer, business and organisation in the UK.

Retail lending

Most UK households use credit products like credit cards, mortgages and loans every day.

General insurance and protection

These products allow individuals and businesses to protect themselves against uncertainty.

Retail investments

When consumers get professional advice about investments, they need to know it meets their needs.

Read more on Sector priorities

Measuring our performance

We use a 3-tier approach to measure our performance: the efficiency of our internal processes, impact of our interventions and the outcomes in the sectors we regulate. 

FCA building

How we work

We aim to regulate in a way that adds the most benefit to those who use financial services.

Read more on Measuring our performance

Financial data

Our financial statements provide details of our income and expenditure for the year ended 31 March 2018.

Download all reports

Annual Report and Accounts 2017/18

Read the full report

PDF (2.24 MB)

Competition Annual Report

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PDF (263.66 KB)

Diversity Annual Report

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PDF (743.91 KB)

Enforcement Annual Performance Report

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PDF (393.96 KB)

Anti-Money Laundering Annual Report (AML)

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PDF (367.83 KB)

Adroddiad a Chyfrifon Blynyddol 2017/18

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